Exhibit 1.1
PLACEMENT AGENT AGREEMENT
As of October 22, 2004
Xxxxxxxxxx Securities Corporation
0 Xxxx Xxx Xxxx Xxxx., 0xx Xxxxx
Xx. Xxxxxxxxxx, Xxxxxxx 00000
Re: PLACEMENT AGENT AGREEMENT
Gentlemen:
This letter is in confirmation of our agreement with you pertaining to the
private placement, coordinated by Xxxxxxxxxx Securities Corporation (the
"Placement Agent," "Xxxxxxxxxx" or "you") as placement agent on a "best efforts
- $2,500,000 minimum/$6,000,000 maximum" basis, of Units (the "Units"), each
Unit consisting of (i) one (1) share of Series A Convertible Preferred Stock
(the "Series A Preferred Stock"), and (ii) a detachable, transferable three-year
warrant (the "Warrant") to purchase 5,000 shares of Common Stock of a Securities
and Exchange Commission ("SEC") reporting and registered publicly-traded company
that will be quoted on the OTC Bulletin board ("Pubco") (the "Offering"). The
Offering will close concurrently with the closing of a reverse merger
transaction (the "Reverse Merger") involving a wholly-owned subsidiary of Pubco,
and CepTor Corporation ("CepTor"). The terms, conditions, rights, preferences
and privileges of the securities comprising the Units will be more fully
described in the Memorandum (as defined in Section 1(a) below). The following
terms and conditions shall, if accepted by you, constitute a legally binding
agreement between us. Either party may terminate this agreement at any time in
the event of a material breach of this Agreement by the other in which event the
terminating party shall have no further liability hereunder.
Section 1. DESCRIPTION OF SECURITIES
(a) The shares of Series A Preferred Stock and Warrants to be offered and
sold in the Offering on a "best efforts - minimum/maximum" basis shall conform
in all material respects to the description thereof contained in a Confidential
Private Placement Memorandum to be prepared by CepTor (as the same may be
amended or supplemented from time to time, and including all exhibits and
appendices attached thereto, the "Memorandum"), which will contain (i) a
description of CepTor and its business, assets, prospects and management; (ii)
the terms and conditions of the Offering; (iii) a description of the securities
comprising the Units; and (iv) certain financial information. If necessary,
Pubco and CepTor will update or supplement the Memorandum prior to completion of
the Offering. Without CepTor's prior written consent, you will not distribute
any offering materials to prospective investors other than the Memorandum. You
shall be entitled to rely on the accuracy and completeness of all information
provided by CepTor and Pubco, including information incorporated by reference in
the Memorandum. Additionally, representatives of CepTor and Pubco shall be
available to answer questions of, and to provide additional information to, any
potential investors. You will not make any use of the Memorandum other than for
purposes of implementing this Agreement, nor will you or any of your agents or
employees use the same or do any other act or thing in the course of the
offering or sale hereunder which would constitute a violation of the Securities
Act of 1933, as amended ("Securities Act"), the Securities Exchange Act of 1934,
as amended ("Exchange Act"), any state "blue sky" laws or regulations and any
other securities laws applicable to the Offering.
(b) The Offering will be conducted to raise from investors a minimum of
$2,500,000 from the sale of 100 Units and a maximum of $6,000,000 from the sale
of 240 Units, at the purchase price per Unit of $25,000. After giving effect to
the completion of the Reverse Merger, the conversion of certain outstanding
indebtedness, the purchase of additional shares by JCR Pharmaceuticals, and
assuming the successful completion of the Offering, assuming conversion of the
Series A Preferred Stock sold in the Offering, the capitalization shall be as
set forth in the final Private Placement Memorandum approved by CepTor,
Xxxxxxxxxx and Pubco. Upon the mutual agreement of CepTor and the Placement
Agent, CepTor may sell additional Units at the same price per Unit, provided
that the aggregate number of additional Units sold shall not exceed than 36
Units.
Section 2. REPRESENTATIONS AND WARRANTIES
(a) Each of CepTor and Pubco represents and warrants to the Placement
Agent, as to itself only and not with respect to any matters which do not
pertain to itself, as follows:
(i) CepTor has full corporate power and authority to execute,
deliver and perform its obligations under this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement, the consummation by CepTor of the transactions herein
contemplated and the compliance by CepTor with the terms of this Agreement have
been duly authorized by all necessary corporate action on the part of CepTor,
and when duly executed and delivered by CepTor this Agreement will constitute a
valid and binding obligation of CepTor, enforceable in accordance with its
terms.
(ii) Pubco has the corporate power and authority to execute and
deliver this Agreement and the Subscription Agreement and to perform its
obligations hereunder and thereunder and to issue the Units and the Placement
Agent Warrants and the Common Stock for which the Series A Preferred Stock may
be converted and the Warrants and the Placement Agent Warrants may be exercised.
This Agreement and the Subscription Agreement have been duly authorized by Pubco
and when executed and delivered by Pubco, will constitute its valid and binding
obligation and be enforceable against Pubco in accordance with its terms.
(iii) Neither the execution and delivery nor the performance of this
Agreement, the Subscription Agreement, nor the issuance of the Series A
Preferred Stock or the Warrants or the Placement Agent Warrants by Pubco does
not and will not at the closing of the Offering (the "Closing Time") conflict
with Pubco's Certificate of Incorporation, as amended, or By-laws, or result in
a breach of any terms or provisions of, or constitute a default under, any
material contract, agreement or instrument to which Pubco is a party or by which
Pubco is bound.
(iv) Neither the execution and delivery nor the performance of this
Agreement does, and at the Closing Time will not, conflict with CepTor's
Certificate of Incorporation, as amended, or By-laws, or result in a breach of
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any terms or provisions of, or constitute a default under, any material
contract, agreement or instrument to which CepTor is a party or by which CepTor
is bound.
(v) From the date of commencement of sales until completion of the
Offering of the Units by the Placement Agent, the Memorandum will contain all
statements required to be stated therein in accordance with the Securities Act,
will not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading; provided, however, that no representation or warranty is made
(i) as to the applicability of Rule 419 under the Securities Act and (ii) as to
any requirement to disclose the identity of Pubco in the Memorandum.
(vi) CepTor has prepared the Memorandum, which may be supplemented or
amended from time to time and which contains information materially accurate as
of the date specified therein, including, without limitation:
(A) The terms of the Offering;
(B) a description of the Units, the Series A Preferred Stock,
the Warrants and the Common Stock;
(C) a description of the Reverse Merger;
(D) a description of the business conducted by CepTor;
(E) the financial condition of CepTor;
(F) past material activities of CepTor;
(G) commissions and compensation to be paid to the Placement
Agent in connection with the Offering;
(H) disclosure of material contracts, agreements or other
business arrangements, which affect or are related to the
business conducted by CepTor and to be conducted by CepTor;
(I) information regarding CepTor, its management, material
obligations, liabilities, any pending or threatened lawsuits
or proceedings, and recent material adverse changes in its
financial condition;
(J) any appropriate legends and such other information or
material as the Placement Agent may reasonably request to be
included therein;
(K) information regarding any and all of CepTor's "employee
benefit plans" (within the meaning of Section 3(3) of the
Employment Retirement Security Act of 1974, as amended, and
any other employee benefit or fringe benefit plans,
arrangements, practices, contracts, policies or programs,
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including, without limitation, employee stock option plans;
and
(L) information regarding certain relationships and related
transactions as would be required under Item 404 of
Regulation S-B under the Securities Exchange Act of 1934, as
amended.
(vii) Each of CepTor and Pubco are, and at the Closing Time will be, a
corporation duly organized, validly existing and in good standing under the laws
of its respective jurisdiction of incorporation. Each of CepTor and Pubco has,
and at the Closing Time will have, the power and authority to conduct all of the
activities conducted by it, to own or lease all of the assets owned or leased by
it and to conduct its business as described in the Memorandum. Each of CepTor
and Pubco is, and at the Closing Time will be, duly licensed or qualified to do
business and in good standing as a foreign corporation in all jurisdictions in
which the nature of the activities conducted by it or the character of the
assets owned or leased by it makes such license or qualification necessary,
except where the failure to be so qualified would not have a material adverse
effect on CepTor or Pubco, as the case may be. Complete and correct copies of
the charter and the bylaws of each of CepTor and Pubco (including all amendments
thereto) have been delivered to you, and no changes therein will be made
subsequent to the date hereof and prior to the Closing Time, except as
contemplated by the Memorandum and advised to you.
(viii) CepTor had, at the date or dates indicated in the Memorandum, a
duly authorized and outstanding capitalization as set forth in the Memorandum
under the caption "Capitalization." Immediately prior to the Closing Time, Pubco
will have a duly authorized and outstanding capitalization as set forth in the
Memorandum under the caption "Capitalization" on a pro forma basis after giving
effect to the Reverse Merger.
(ix) Subsequent to the date hereof and prior to the Closing Time,
CepTor will not acquire any of its equity securities and will not issue any of
its securities other than pursuant to currently outstanding stock options,
warrants and convertible securities, unless such information is included in a
current supplement to the Memorandum. Except as set forth herein or referred to
in the Memorandum, neither CepTor nor Pubco has outstanding, and at the Closing
Time will not have outstanding, any stock options to purchase, or any rights or
warrants to subscribe for, or any securities or obligations convertible into or
any contracts or commitments to issue or sell, shares of the Common Stock or any
such warrants, convertible securities or obligations, except as those described
therein.
(x) The financial statements (including the schedules and notes
thereto) of CepTor included in the Memorandum present fairly the financial
position of CepTor as of the dates thereof, and the results of operations and
changes in financial position of CepTor for the periods indicated therein are in
conformity with generally accepted accounting principles applied on a consistent
basis throughout the periods involved.
(xi) Except to the extent reflected or reserved against in the
financial statements of CepTor included in the Memorandum, or as otherwise
described in the Memorandum, CepTor has had no material liabilities, debts,
obligations or claims asserted against it, whether accrued, absolute, contingent
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or otherwise, and whether due or to become due, including, without limitation,
liabilities on account of taxes, other governmental charges or lawsuits brought
subsequent to such date. Except to the extent reflected or reserved against in
the most recently filed financial statements of Pubco in its Annual Report on
Form 10-KSB, or as otherwise described in the Memorandum, Pubco has no material
liabilities, debts, obligations or claims asserted against it, whether accrued,
absolute, contingent or otherwise, and whether due or to become due, including,
without limitation, liabilities on account of taxes, other governmental charges
or lawsuits brought subsequent to such date.
(xii) Subsequent to the respective dates as of which information is
set forth in the Memorandum and prior to the Closing Time, except as set forth
in the Memorandum, (i) CepTor has not incurred and will not have incurred any
material liabilities or obligations, direct or contingent, and has not entered
into any material transactions other than as contemplated in the Memorandum, and
will not enter into any material transaction without disclosing such material
transaction to the Placement Agent, (ii) CepTor has not and will not have paid
or declared any cash dividends or other distribution on its capital stock, and
(iii) there has not been any material adverse change in the business,
properties, financial condition, results of operations or prospects of CepTor,
or in the book value of the assets of CepTor, arising from any reason
whatsoever.
(xiii) Except as set forth in the Memorandum, neither CepTor nor Pubco
has, and at the Closing Time neither CepTor nor Pubco will have, any material
contingent obligations.
(xiv) Neither CepTor nor Pubco has any subsidiaries, except as
disclosed in the Memorandum, nor does either have any equity interest in any
partnership, joint venture, association or other entity, except as disclosed in
the Memorandum.
(xv) Except as set forth in the Memorandum, there are no material
actions, suits or proceedings pending, or to the knowledge of CepTor threatened,
against or affecting CepTor or Pubco or their respective businesses, financial
condition, results of operations or material properties before or by any federal
or state court, commission, regulatory body, administrative agency or other
governmental body, domestic or foreign, wherein an unfavorable ruling, decision
or finding would materially and adversely affect (i) CepTor or its businesses,
financial condition, results of operations or material properties taken as a
whole, or (ii) the ability of CepTor or Pubco to consummate the transactions
contemplated by this Agreement.
(xvi) Neither CepTor nor Pubco is in violation of its charter or
bylaws. Neither the execution and delivery of this Agreement, nor the issuance
and sale of the Units sold in the Offering, nor the consummation of any of the
transactions contemplated herein, nor the compliance by CepTor or Pubco with the
terms and provisions hereof has conflicted with or will conflict with or has
resulted in or will result in a breach of, any of the terms and provisions of,
or has constituted or will constitute a default under, or has resulted in or
will result in the creation or imposition of any lien, charge or encumbrance
upon any property or assets of CepTor or Pubco pursuant to the terms of any
indenture, mortgage, deed of trust, note, loan or credit agreement or any other
agreement or instrument to which CepTor or Pubco is a party or by which CepTor
or Pubco may be bound or to which any of the property or assets of CepTor or
Pubco is subject; nor will such action result in any violation of the provisions
of the charter or the bylaws of CepTor or Pubco or any statute, order, rule or
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regulation applicable to CepTor or Pubco or of any federal, state or other
judicial, administrative or regulatory authority or other government body having
jurisdiction over CepTor or Pubco.
(xvii) The shares of Series A Preferred Stock, the Warrants, the
Placement Agent Warrants and the shares of Common Stock underlying the Series A
Preferred stock, the Warrants and the Placement Agent Warrants referred to in
the Memorandum will, upon issuance, assuming the payment of the applicable
purchase or exercise price therefor, be validly issued, fully paid and
non-assessable. The Series A Preferred Stock and the Common Stock underlying the
Series A Preferred Stock, the Warrants and the Placement Agent Warrants will not
be subject to the preemptive rights of any security holder. As of the Closing,
the issuance and sale of each of the securities comprising the Units, the
Placement Agent Warrants and the Common Stock underlying the Series A Preferred
Stock, the Warrants and the Placement Agent Warrants will have been duly and
validly authorized by all required corporate action and otherwise.
(xviii) All issued and outstanding securities of CepTor have been duly
authorized and validly issued and the outstanding Common Stock is fully paid and
non-assessable; and none of such securities were issued in violation of the
pre-emptive rights of any holders of any security of CepTor.
(xix) CepTor has good and marketable title to all properties and
assets free and clear of all liens, charges, encumbrances or restrictions,
except such liens, charges, encumbrances or restrictions as are not material to
the business of CepTor or as are set forth in the Memorandum. CepTor has valid
and enforceable leases or licenses for the material properties as used by it in
the operation of its business. All rentals, royalties or other payments accruing
under any such licenses or leases which became due prior to the date of this
Agreement have been duly paid, and neither CepTor nor any other party is in
material default thereunder, and, to the knowledge of CepTor, no event has
occurred which, with the lapse of time or the giving of notice, or both would
constitute a material default thereunder.
(xx) All taxes which are due from CepTor and Pubco have been paid in
full (or adequate accruals for the payment thereof have been provided for in its
accounting records). Each of CepTor and/or Xechem International Inc., its
parent, and Pubco has filed all federal, state, municipal and local tax returns
relating to CepTor or Pubco, as the case may be, (whether relating to income,
sales, franchise, withholding, real or personal property or other types of
taxes) required to be filed under the laws of the United States and applicable
states or has duly obtained extensions of time for the filing thereof. As to
CepTor, the provisions for income taxes payable, if any, shown on the financial
statements contained in the Memorandum are sufficient for all accrued and unpaid
foreign and domestic taxes, whether or not disputed, and for all periods to and
including the dates of such financial statements. As to Pubco, the provisions
for income taxes payable, if any, shown on the financial statements contained in
Pubco's most recently filed form 10-KSB are sufficient for all accrued and
unpaid foreign and domestic taxes, whether or not disputed, and for all periods
to and including the dates of such financial statements. Each of the tax returns
heretofore filed by each of CepTor and Pubco correctly and accurately reflects
the amount of CepTor's and Pubco's respective tax liability thereunder. Each of
CepTor and Pubco has withheld, collected and paid all other levies, assessments,
license fees and taxes to the extent required and, with respect to payments, to
the extent that the same have become due and payable. Neither CepTor nor Pubco
has executed or filed with any taxing authority, foreign or domestic, any
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agreement extending the period for assessment or collection of any income taxes
nor is either a party to any pending action or proceeding by any foreign or
domestic governmental agency for assessment or collection of taxes; and no
claims for assessment or collection of taxes have been asserted against CepTor
or Pubco.
(xxi) Except as set forth in the Memorandum, neither CepTor nor Pubco
has (i) issued any securities or incurred any liability or obligation, direct or
contingent, for borrowed money, or entered into any transaction other than in
the ordinary course of business, and which is not required to be disclosed in
the Memorandum, nor (ii) declared or paid any dividend or made any other
distribution on or in respect to its capital stock.
(xxii) Neither CepTor nor Pubco has any financial obligations of any
kind coming due before December 31, 2004, that will negatively impact the rights
of the investors in the Offering other than the 10% Notes and Bridge Loans, as
such terms are defined in the Memorandum.
(xxiii)Except for the filing of (A) Form D under the Securities Act,
(B) the filing with the Secretary of State of the State of Florida of a
Certificate of Designations setting forth the rights preferences and privileges
of the Series A Preferred Stock, and (C) other than as may be required under
applicable state securities or Blue Sky laws, no authorization, approval,
consent, order, registration, certification, license or permit (collectively,
"Permits") of any court or governmental agency or body, is required for the
valid authorization, issuance, sale and delivery of the Units or the Placement
Agent Warrants, subject to compliance by Placement Agent with regulations
regarding an offering to accredited investors under Regulation D promulgated
under the Securities Act.
(xxiv) Each contract or other instrument to which CepTor is a party or
by which its properties or business is or may be bound or affected and to which
reference is made in the Memorandum has been duly and validly executed by CepTor
and assuming that such contracts or other instruments have been properly
executed by the parties other than CepTor is in full force and effect in all
material respects and is enforceable against the parties thereto in accordance
with its terms, and none of such contracts or instruments has been assigned by
CepTor and except as described in the Memorandum, neither CepTor nor any other
party is in default thereunder and no event has occurred which, with the lapse
of time or the giving of notice, or both, would constitute a default thereunder.
None of the material provisions of such contracts or instruments violates any
existing applicable law, rule, regulation, judgment, order or decree of any
governmental agency or court having jurisdiction over CepTor or its assets or
business.
(xxv) Except as set forth in or contemplated by the Memorandum,
neither CepTor nor Pubco has any employee benefit plans (including, without
limitation, profit sharing and welfare benefit plans) or deferred compensation
arrangements that are subject to the provisions of the Employee Retirement
Income Security Act of 1974.
(xxvi) Neither CepTor nor Pubco has directly or indirectly, at any
time, (A) made any contributions to any candidate for political office, or
failed to disclose fully any such contribution in violation of law or (B) made
any payment to any state, federal or foreign governmental officer or official,
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or other person charged with similar public or quasi-public duties, other than
payments or contributions required or allowed by applicable law.
(xxvii) Assuming the representations and warranties of the Placement
Agent contained herein and of the purchasers contained in the Subscription
Documents are true and correct, the offer and sale of the Units by CepTor has
satisfied and at the Closing Time will have satisfied all of the requirements of
Regulation D and CepTor is not disqualified from the exemption under Rule 505
contained in Regulation D by virtue of the disqualifications contained in Rule
505(b)(2)(iii), or the exemption under Regulation D by virtue of the
disqualification contained in Rule 507. The Memorandum and related documents
conform in all material respects with the requirements of Section 4(2) of the
Securities Act and Regulation D promulgated thereunder and with the requirements
of all other published rules and regulations of the SEC and state blue sky
securities laws currently in effect relating to "private offerings."
(xxviii) To the best of its knowledge, CepTor owns or possesses or can
acquire on reasonable terms adequate and enforceable rights to use all
trademarks, service marks, copyrights, patent rights, trade secrets or other
confidential information currently used in the conduct of its business as
described in the Memorandum (the "Intangibles"). Except as disclosed in the
Memorandum, to CepTor's knowledge, CepTor is not infringing upon the rights of
others with respect to the Intangibles and has not received any notice of
conflict with the asserted rights of others with respect to the Intangibles
which could, singly or in the aggregate, materially adversely affect CepTor's
business, financial condition, results of operations or prospects, and CepTor
does not know of any basis therefore. To CepTor's knowledge, no other party has
infringed upon the Intangibles.
(xxix) CepTor has adequately insured its properties against loss or
damage by fire or other casualty and maintains such other insurance as is
usually maintained by companies engaged in the same or similar business.
(xxx) Concurrently with or prior to the execution hereof, CepTor has
provided the Placement Agent with the results of UCC lien searches in all
jurisdictions in which CepTor has material assets.
(b) The Placement Agent represents and warrants to CepTor as follows:
(i) The Placement Agent is, and at the Closing Time, will be, a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction. The Placement Agent is, and at the Closing Time will be,
duly licensed and qualified in good standing as a broker-dealer authorized to
conduct private placements under all applicable laws, rules and regulations,
including without limitation the rules and regulations of the SEC, the National
Association of Securities Dealers, Inc., and those states in which it is
required to be so registered in order to carry out the Offering contemplated by
the Memorandum.
(ii) This Agreement has been duly authorized, executed and delivered
by the Placement Agent and is a valid and binding agreement on its part. Neither
the execution and delivery of this Agreement, nor the consummation of any of the
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transactions contemplated herein, nor the compliance by the Placement Agent with
the terms and provisions hereof has conflicted with or will conflict with or has
resulted in or will result in a breach of, any of the terms and provisions of,
or has constituted or will constitute a default under, or has resulted in or
will result in the creation or imposition of any lien, charge or encumbrance
upon any property or assets of the Placement Agent pursuant to the terms of any
indenture, mortgage, deed of trust, note, loan or credit agreement or any other
agreement or instrument to which the Placement Agent is a party or by which the
Placement Agent may be bound or to which any of its properties or assets is
subject; nor will such action result in any violation of the provisions of the
certificate of incorporation or the bylaws of the Placement Agent or any
statute, order, rule or regulation applicable to the Placement Agent or of any
federal, state or other judicial, administrative or regulatory authority or
other government body having jurisdiction over the Placement Agent.
(iii) The Placement Agent shall at all times conduct the Offering in
compliance with all federal and state statutes, laws, rules and regulations
applicable to an offering to all accredited investors conducted under Rule 506
of Regulation D and Section 4(2) of the Securities Act.
Section 3. PURCHASE, SALE AND DELIVERY OF THE SHARES; CLOSING; ESCROW;
ACCEPTANCE OF SUBSCRIPTIONS
(a) On the basis of the representations and warranties contained in this
Agreement and subject to the terms and conditions herein set forth, CepTor and
Pubco hereby appoint the Placement Agent as its exclusive agent to offer and
sell to "accredited investors," as such term is defined in Rule 501 of
Regulation D, as promulgated under the Securities Act, the Units for a purchase
price of $25,000 per Unit or such other price as the Placement Agent and CepTor
may agree in writing. The Placement Agent hereby accepts such appointment and
agrees to use its commercially reasonable best efforts as agent for CepTor to
sell the Units. No sale of Units will be consummated unless the gross proceeds
from the sale of the Units by the Placement Agreement shall be an amount of
$2,500,000 or more. The Placement Agent hereby agrees, subject to the terms of
this Agreement, to use its commercially reasonable best efforts to sell the
Units pursuant to the terms set forth in the Memorandum.
(b) The Parties hereto shall enter into an escrow agreement at or prior to
the Closing with Corporate Stock Transfer, Inc., as escrow agent (the "Escrow
Agent") and Guaranty Bank & Trust, as escrow bank (the "Escrow Bank"), or such
other escrow agent as may be mutually agreed upon by the parties hereto. The
escrow agreement will provide for the direct disbursement of all fees and funds
held by the Escrow Agent.
(c) Each of CepTor and the Placement Agent, in its sole and absolute
discretion, may choose to accept or reject any subscription for Units, and
neither may require a closing to occur with respect to any subscription that is
rejected by Placement Agent or CepTor, as the case may be.
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Section 4. PLACEMENT AGENT COMPENSATION; EXPENSES
(a) PLACEMENT FEE
As compensation for the services to be rendered by the Placement Agent, in
connection with the sale of Units in the Offering, CepTor, upon each closing of
the Offering, shall pay to the Placement Agent a placement fee equal to eight
percent (8%) of the gross proceeds derived from the sale of the Units subscribed
for, in cash, whether the sale was directly the result of Placement Agent's
efforts or indirectly through the efforts of any other party legally permitted
to effect the sale (including, but not limited to, NASD Members as selling
agents, which the Placement Agent may permit to participate in the Offering). In
the event that CepTor sells Units in excess of the maximum offering of Units
stated in the Memorandum (the "Over-subscription"), then CepTor shall pay an
additional placement fee to the Placement Agent equal to eight percent (8%) of
the gross proceeds of the Units subscribed for in such Over-subscription, in
cash. The placement fees are to be deducted by the Escrow Agent from the funds
received in the Escrow Account at the Closing. In addition, CepTor shall, upon
each closing of the Offering (including the Over-subscription), pay to the
Placement Agent, in cash, a non-accountable expenses allowance equal to two
percent (2%) of the gross proceeds derived from the sale of Units subscribed
for.
(b) OUT-OF-POCKET EXPENSES
The parties hereto agree that if CepTor terminates the Offering (other than
in the case of a material breach of this agreement by Xxxxxxxxxx) or if
Placement Agent terminates this Agreement in the event of a material breach of
this Agreement by CepTor, that all reasonable documented out-of-pocket expenses
of Placement Agent with respect to the Offering, including but not limited to
the reasonable fees and expenses of counsel to the Placement Agent, shall be
paid by CepTor promptly, and in any event not later than five (5) days following
the date of any such termination. Placement Agent's out of pocket expenses shall
otherwise be the responsibility of the Placement Agent to be satisfied out of
the non-accountable expense allowance of Placement Agent.
(c) EQUITY COMPENSATION
At the Closing, in connection with the sale by CepTor of the minimum number
of Units offered in the Offering, the Placement Agent shall receive equity
compensation in the form of 150,000 shares of Common Stock and five-year
warrants to purchase, at an exercise price of $1.25 per share, the number of
shares of Common Stock equal to 10% of the number of shares of Common Stock
underlying the shares of Series A Preferred Stock sold in the Offering (the
"Placement Agent Warrants"). In the event that CepTor sells Units in an
Over-subscription, then at the Closing, CepTor, upon the closing of the
Offering, shall issue to the Placement Agent additional Placement Agent Warrants
to purchase, at an exercise price of $1.25 per share, 10% of the total number of
shares of Common Stock underlying the Series A Preferred Stock sold in the
Over-subscription.
Section 5. OFFERING DOCUMENTS
CepTor will deliver to you, without charge, as many copies as you have
reasonably requested of the Memorandum, including any exhibits attached thereto
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(the "Offering Documents"). All mailing and other expenses associated with
distribution of the Offering Documents to any person, including, without
limitation, potential investors, shall be paid by CepTor. If during the offering
period CepTor becomes aware of any event, as a result of which the Memorandum,
as then amended or supplemented, would include an untrue statement of a material
fact, or omit to state a material fact necessary in order to make the statements
made in light of the circumstances in which they were made not misleading, or if
it shall be necessary to amend or supplement the Memorandum to comply with
applicable law, CepTor shall forthwith notify the Placement Agent thereof, and
furnish to the Placement Agent in such quantities as may be reasonably
requested, an amendment or amended and supplemented Memorandum which corrects
such statements or omissions or causes the Memorandum to comply with applicable
law. Prior to the Closing or earlier termination of the Offering, no copies of
the Memorandum or any exhibit thereto, or any material prepared by CepTor in
connection with the Offering will be given without the prior written permission
of the Placement Agent, by CepTor or its counsel or by any principal or agent of
CepTor to any person not a party to this Agreement, unless (i) such person is a
director or principal shareholder of, counsel to, accountant for, or directly
employed by, CepTor, or Xechem or is named in the Memorandum or is 10% Note or
Bridge Loan holder (ii) such delivery is made to a state or federal regulatory
agency in connection with a specific legal requirement of the Offering, or (iii)
such delivery is required pursuant to the order of a court, a state or federal
regulatory agency or applicable law. CepTor may provide copies of the Memorandum
as a disclosure document to any debtholder in connection with an offer to
exchange CepTor debt to Xechem.
Section 6. COVENANTS
(a) CepTor, together with Pubco on a combined basis with CepTor upon the
closing of the Reverse Merger and the Offering, covenants and agrees with the
Placement Agent as follows:
(i) Pubco shall file on or before the date which is 60 days after the
Closing Time one or more registration statements which will cover the shares of
Common Stock (A) issued in the Reverse Merger, (B) underlying the Series A
Preferred Stock and Warrants sold in the Offering, and (C) underlying the
Placement Agent Warrants, for resale with the SEC and under the securities or
"Blue Sky" laws of such jurisdictions as is required. In addition, Pubco shall
file such amendments and furnish such information as may be required for such
purpose and to comply with such laws so as to continue to maintain the
effectiveness of the resale registration statement from the effective date
thereof through and until the date which is 12 months after the Closing Time.
Confirmation of these actions being taken will be provided to Placement Agent
with copies of all documents relating thereto. In the event the resale
registration statement is not filed with the SEC on or prior to the date which
is 180 days after the Closing Time, the total number of shares of Common Stock
underlying the Series A Preferred Stock sold as part of the Units in the
Offering and to be covered by the registration statement for each investor in
the Offering and their permitted transferees, successors, executors or
administrators (each such party, a "Holder") shall be increased by 2% per month
for each month (or portion thereof) that the registration statement is not so
filed. Pubco shall use its best efforts to respond to any Securities and
Exchange Commission (the "SEC") comments to the registration statement on or
prior to the date which is 15 business days from the date such comments are
received, but in any event not later than 20 business days from the date such
comments are received. In the event that Pubco fails to respond to such comments
within 20 business days, the total number of shares of Common Stock underlying
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the Series A Preferred Stock sold as part of the Units in the Offering and to be
covered by the registration statement for each Holder shall be increased by 2%
per month for each month (or portion thereof) that a response to the comments to
the registration statement has not been submitted to the SEC. Notwithstanding
anything contained in this Section 6(a)(ii) to the contrary, the aggregate
increases in shares of Common Stock to be issued to investors pursuant to this
paragraph shall not exceed 12%. CepTor shall use its best efforts to have such
resale registration statement declared effective by the SEC as soon as possible
after the initial filing date.
(ii) CepTor and Pubco will apply the net proceeds from the Offering in
the manner set forth under the heading "USE OF PROCEEDS" in the Memorandum.
(iii) CepTor and Pubco will apply three percent (3%) of the gross
proceeds of the Offering to initiate a capital markets program, which amount
shall be held in a segregated bank account requiring the signature of Placement
Agent and CepTor for all withdrawals.
(iv) CepTor shall, upon the closing of the Offering and until the next
annual meeting of shareholders, cause a designee of Placement Agent to serve on
the board of directors of CepTor and on the audit committee and compensation
committee of the Board of Directors.
(v) At least three (3) days prior to the date of closing of the
Merger, CepTor and Pubco shall prepare and deliver to you and to each subscriber
via overnight courier, email or facsimile, a draft copy of the Current Report on
Form 8-K (the "Draft Form 8-K") proposed to be filed by Pubco, which shall
describe the terms and conditions of the Merger, in accordance with the
requirements of the Securities Exchange Act of 1934 and the Accounting and
Financial Reporting Interpretations and Guidance issued by the accounting staff
members of the Division of Corporate Finance of the Securities and Exchange
Commission on March 31, 2001, as the same relates to "Reverse
Acquisitions-Reporting Issues." CepTor and Pubco shall include with such Draft
Form 8-K a transmittal letter to each subscriber which states the Closing Time
and informs each subscriber that, if after reviewing the Draft Form 8-K and
conducting any due diligence concerning Pubco, they wish to rescind their
subscription to purchase Units and have their subscription proceeds returned,
they may do so at any time up to the Closing Time by so notifying CepTor or the
Placement Agent in writing. Such transmittal letter shall include a reference to
the SEC's website as a source for information regarding Pubco.
(vi) Neither CepTor nor Pubco shall (A) release any stockholder of
Pubco from the provisions of any agreement of such stockholder with CepTor or
Pubco to refrain from selling shares of stock owned by such stockholder (a "Lock
Up Agreement"), (B) accelerate the date on which such stockholder will become
eligible to sell shares of stock (except upon the initiation of a Phase III
clinical trial of CepTor's "Myodor" technology for muscular dystrophy) or (C)
waive compliance with the provisions of any Lock Up Agreement, without the prior
written consent of the Placement Agent.
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(b) The Placement Agent covenants and agrees with CepTor as follows:
(i) Pursuant to its appointment hereunder, insofar as is under its
control, the Placement Agent will use its commercially reasonable best efforts
to conduct the Offering in the manner prescribed by Rule 506 of Regulation D and
in this regard will:
(A) Refrain from making any oral or written representations
beyond those contained in the Memorandum;
(B) Refrain from offering, offering for sale or selling any of
the Units by means of any form of general solicitation or
general advertising within the meaning of Rule 502(c) of
Regulation D, including:
(x) Any advertisement, article, notice or other
communication mentioning the Units published in any
newspaper, magazine or similar medium or broadcast over
television or radio; or
(y) Any seminar or meeting whose attendees have been
invited by any general solicitation or general
advertising;
(C) Prior to the sale of any of the Units, have reasonable
grounds to believe based solely on each subscriber's
Offering Documents that each subscriber is an accredited
investor within the meaning of Rule 501(a) of Regulation D;
(D) Based solely on the representation of the subscriber in its
Offering Documents, have no reason to believe that the
subscriber is acquiring the Units for other than his or its
own account;
(E) Provide each offeree with a copy of the Memorandum during
the course of the Offering;
(F) During the course of the Offering, if it has been provided
with a supplement or amendment to the Memorandum, promptly
distribute such supplement or amendment to persons who
previously received a copy of the Memorandum from it and
whom it believes continue to be interested in the Offering,
and include such supplement or amendment in all deliveries
of the Memorandum made after receipt of any such supplement
or amendment;
(G) Obtain a completed investor questionnaire from each accepted
subscriber; and
(H) Comply in all material respects with the Trading with the
Enemy Act and applicable foreign assets control regulations
of the United States Treasury Department and the Patriot Act
of 2001.
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(ii) Upon receipt of each Subscription Agreement and any funds paid by
subscribers for Units, the Placement Agent will promptly deliver the original
copy of the Subscription Agreement and any accompanying check, bank draft or
money order to the Escrow Agent for deposit with the Escrow Bank; except that it
may promptly return all such Offering Documents and funds to any subscriber who
it determines, based solely on a review of the Offering Documents, is not an
accredited investor within the meaning of Rule 501(a) of Regulation D or whose
check, bank draft or money order representing subscription funds is improperly
drawn.
(iii) The Placement Agent shall maintain appropriate records of the
Offering Documents of each subscriber for a period of at least four years after
the Termination Date.
(iv) The placement agent shall not engage in any uncovered short sales
of the stock of the Company.
Section 7. EXPENSES
(a) CepTor, upon the closing of the Offering, will pay and bear all
costs, fees, taxes and expenses incident to the performance of the obligations
of CepTor under this Agreement, including, but not limited to, the expenses and
taxes incident to:
(i) the issuance of the Series A Preferred Stock and Warrants
pursuant to the Offering Documents and the preparation and delivery of
certificates evidencing the Series A Preferred Stock and Warrants;
(ii) the registration or qualification for resale of the shares of
Common Stock underlying the Series A Preferred Stock and Warrants issued in the
Offering and pursuant to the Reverse Merger and shares of Common Stock
underlying the Placement Agent Warrants under the securities laws of the various
jurisdictions including the fees and disbursements of your counsel in connection
therewith; and
(iii) all transfer taxes with respect to the sale and delivery of the
Series A Preferred Stock and Warrants sold pursuant to the Offering Documents
and the Placement Agent Warrants.
(b) CepTor will pay and bear all fees and expenses of counsel for CepTor
and of CepTor's accountants, transfer agents and any special agents appointed
for the transfer of securities and the Escrow Agent.
Section 8. CONDITIONS OF YOUR OBLIGATIONS
Your obligations as Placement Agent are subject (as of the date hereof and
as of the Closing Time), to the accuracy of and compliance with the
representations and warranties of CepTor and to the accuracy of the statements
of CepTor made pursuant to the provisions hereof and to the performance by
CepTor of its covenants and agreements hereunder, and to the following
additional conditions:
(a) Since the respective dates as of which information is given in the
Memorandum:
(i) there shall not have been any change in the capital stock of
CepTor or any material change in the long-term debt of CepTor or Pubco, except
as set forth in or contemplated by the Memorandum;
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(ii) there shall not have been any material adverse change in the
general affairs, management, financial position or result of operations of
CepTor or Pubco, whether or not arising from transactions in the ordinary course
of business, other than as set forth in or contemplated by the Memorandum;
(iii) each of CepTor and Pubco shall not have sustained any material
interference with its business or properties from fire, explosion, flood or
other casualty, whether or not covered by insurance, or from any labor dispute
or any court or legislative or other governmental action, order or decree, if in
the judgment of the Placement Agent any such development referred to in clauses
(i), (ii) or (iii) makes it impracticable or inadvisable to consummate the sale
and delivery of the Series A Preferred Stock and the Warrants by the Placement
Agent; and
(iv) the spinoff of Xechem shall have been completed immediately upon
closing and documentary evidence of such completion shall be provided to
Placement Agent.
(b) Since the respective dates as of which information is given herein,
there shall have been no litigation instituted against CepTor or Pubco and since
such dates there shall be no proceeding instituted or threatened against CepTor
or Pubco or any of their respective officers or directors, before or by any
federal, state or county court, commission, regulatory body, administrative
agency or other governmental body, domestic or foreign, in which litigation or
proceeding an unfavorable ruling, decision or finding would materially and
adversely affect the business, properties, financial condition or results of
operations of CepTor or Pubco.
(c) Each of the representations and warranties of CepTor contained herein
shall be true and correct at the signing of this Agreement and at the Closing
Time as if made at the Closing Time, and all covenants and agreements herein
contained to be performed on the part of CepTor and all conditions herein
contained to be fulfilled or complied with by CepTor at or prior to the Closing
Time shall have been duly performed, fulfilled or complied with.
(d) At the Closing Time, the counsel for CepTor shall furnish to you an
opinion in form and substance satisfactory to you, dated as of the date of
delivery, to the effect that:
(i) CepTor: (A) has been duly organized and is existing as a
corporation in good standing under the laws of its jurisdiction of organization;
(B) is duly qualified and in good standing as a foreign corporation in each
jurisdiction in which the nature of the activities conducted by it or the
character of the assets owned or leased by it requires such qualifications
except where failure to be so qualified would not have a material adverse effect
on CepTor; and (C) has all requisite corporate power and authority to own or
lease its properties and conduct its business as described herein.
(ii) To the current actual knowledge of such counsel, no
authorization, approval, consent or license of any governmental or regulatory
15
body, agency or instrumentality is required in connection with the
authorization, issuance, transfer, sale or delivery of the Series A Preferred
Stock and Warrants issued pursuant to the Memorandum and the Placement Agent
Warrants, except as may be required pursuant to the federal securities laws and
state Blue Sky laws.
(iii) The outstanding shares of CepTor's capital stock have been duly
authorized and validly issued, are fully paid and non-assessable, and have not
been issued in violation of any pre-emptive rights. The description of CepTor's
capital stock and debt instruments contained in the Memorandum conforms to the
rights set forth in the charter and the bylaws of CepTor. All of the Series A
Preferred Stock and Warrants to be issued in the Offering and the Placement
Agent Warrants, including the shares of Common Stock underlying such securities,
will be duly authorized and adequately reserved for issuance at the Closing Time
by appropriate action of the Board of Directors of Ceptor.
(iv) CepTor has full corporate power and authority to enter into this
Agreement and the Merger Agreement; this Agreement and the Merger Agreement have
been duly authorized, executed and delivered by or on behalf of CepTor and each
constitutes a legal, valid and binding obligation of CepTor (except as may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other laws now or hereafter in effect relating to or affecting creditors' rights
generally and by general principles of equity relating to the availability of
remedies and except as rights to indemnity and contribution may be limited by
applicable securities laws and the public policy underlying such laws).
(v) Such counsel has participated in the preparation of the
Memorandum and to such counsel's current actual knowledge, the Memorandum does
not contain any untrue statement of a material fact or omitted or omits to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading.
(vi) The execution and delivery of this Agreement by CepTor, the
consummation by CepTor of the transactions herein contemplated and the
compliance with the terms of this Agreement do not and will not conflict with or
result in a breach of any of the terms or provisions of, or constitute a default
under, the charter or bylaws of CepTor, or to the best of such counsel's
knowledge, any indenture, mortgage or other agreement or instrument known to
such counsel to which CepTor is a party or by which CepTor or any of its
properties is bound, or any existing law, rule, regulation, judgment, order or
decree of any government, governmental body or court, domestic or foreign,
having jurisdiction over CepTor or any of its respective properties.
(vii) The execution and delivery of the Merger Agreement by CepTor,
the consummation by CepTor of the transactions therein contemplated and the
compliance with the terms of the Merger Agreement do not and will not conflict
with or result in a breach of any of the terms or provisions of, or constitute a
default under, the charter or bylaws of CepTor.
(viii) To such counsel's current actual knowledge, there are no suits
or claims threatened or pending against CepTor in any court or before or by any
governmental body which would materially affect the business of CepTor or its
financial condition except as set forth herein or contemplated by the
Memorandum.
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(e) At the Closing Time, the counsel for Pubco shall furnish to CepTor and
Placement Agent an opinion in form and substance satisfactory to you, dated as
of the date of delivery, to the effect that:
(i) Pubco and Acquisition sub have been duly organized and are
existing as a corporation in good standing under the laws of its jurisdiction of
organization.
(ii) The Series A Preferred Stock and Warrants, including the shares
of Common Stock underlying the Series A Preferred Stock and Warrants to be sold
in the Offering, when issued, assuming the payment of the applicable purchase or
exercise price therefore will be validly issued and outstanding, fully paid and
non-assessable and are owned free and clear of any liens, encumbrances, security
interests, claims or other restrictions, other than as set forth or referred to
in the Memorandum and in the Certificate of Designations filed with applicable
state of organization of Pubco.
(iii) The Common Stock underlying the Series A Preferred Stock and the
Warrants sold in the Offering and the Placement Agent Warrants will be duly
authorized and adequately reserved for issuance at the Closing Time.
(iv) To the current actual knowledge of such counsel, no
authorization, approval, consent or license of any governmental or regulatory
body, agency or instrumentality is required in connection with the
authorization, issuance, transfer, sale or delivery of the Series A Preferred
Stock and Warrants issued pursuant to the Memorandum, except as may be required
pursuant to the federal securities laws and state Blue Sky laws.
(v) The execution and delivery of the Merger Agreement by Pubco, the
consummation by Pubco of the transactions herein contemplated and the compliance
with the terms of the Merger Agreement do not and will not conflict with or
result in a breach of any of the terms or provisions of, or constitute a default
under, the charter or bylaws of Pubco.
(vi) To such counsel's current actual knowledge, there are no suits
or claims threatened or pending against Pubco in any court or before or by any
governmental body which would materially affect the business of Pubco or its
financial condition, except as disclosed in the Memorandum. Pubco is not subject
to any judgments which have not been satisfied.
(vii) To such counsel's actual knowledge, except as disclosed in the
Memorandum and in the annual and periodic reports filed with the SEC on Form
10-KB and Form 10-QSB, respectively, Pubco has no material obligations and is
not subject to any indenture, mortgage or other agreement or instrument to which
Pubco is a party or by which Pubco or any of its properties is bound.
(viii) To such counsel's current actual knowledge, Pubco's annual and
periodic reports filed with the SEC do not contain any untrue statement of a
material fact or omitted or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading.
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(ix) The registration and sale of the shares common stock of Pubco
pursuant to the Pubco's registration on form SB-2, Registration Number
333-105793 is not subject to the provisions of Rule 419 under the Securities
Act.
Section 9. INDEMNIFICATION AND CONTRIBUTION
(a) CepTor agrees to indemnify and hold harmless the Placement Agent, and
its directors, officers and employees and Placement Agent's, legal counsel, each
person, if any, who controls the Placement Agent within the meaning of the
Securities Act or the Exchange Act, and each and all of them, from and against
any and all losses, claims, damages, liabilities or actions, joint or several
(including any investigation, negotiation, legal and other expenses incurred in
connection with, and any amount paid in settlement of, any action, suit or
proceeding or any claim asserted), to which they or any of them may become
subject under the Securities Act, or other federal or state statutory law or
regulation, at common law or otherwise, insofar as such losses, claims, damages,
liabilities or actions arise out of, or are based upon, any untrue statement or
alleged untrue statement of a material fact contained in the Memorandum, or the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, EXCEPT to the extent
any losses, claims, damages, liabilities or actions arise out of any such
statement or omission relating to any information furnished in writing by or on
behalf of the Placement Agent or Pubco to CepTor specifically for use in
connection with the preparation of the Memorandum or contained in the public SEC
filings of Pubco, or the omission of any statement or information as a result of
the failure of the Placement Agent to provide any such information.
(b) The Placement Agent agrees to indemnify and hold harmless CepTor, and
each of its directors and officers and each person, if any, who controls CepTor
within the meaning of Section 15 of the Securities Act, and each and all of
them, from and against any and all losses, claims, damages, liabilities or
actions, (including any investigation, negotiation, legal and other expenses
incurred in connection with, and any amount paid in settlement of, any action,
suit or proceeding or any claim asserted), to which they or any of them may
become subject under the Securities Act, or other federal or state statutory law
or regulation, at common law or otherwise, insofar as such losses, claims,
damages, liabilities or actions arise out of or are based upon any statement in
the Memorandum, in reliance upon and in conformity with information furnished in
writing to CepTor by or on behalf of the Placement Agent specifically for use in
connection with the preparation of the Memorandum. In no event shall the
indemnification and contribution obligations of Placement Agreement exceed the
fees that Placement Agent has actually received pursuant to this Agreement.
(c) Any party which proposes to assert the right to be indemnified under
this Section 9 will, promptly after receipt of notice of commencement of any
action, suit or proceeding against such party in respect of which a claim is to
be made against an indemnifying party under this Section 9, notify each such
indemnifying party of the commencement of such action, suit or proceeding,
enclosing a copy of all papers served, but the omission so to notify such
indemnifying party of any such action, suit or proceeding shall not relieve it
from any liability which it may have to any indemnified party otherwise than
under this Section 9. In case any such action, suit or proceeding shall be
brought against any indemnified party and it shall notify the indemnifying party
of the commencement thereof, the indemnifying party shall be entitled to
participate in and, to the extent that is shall wish, jointly with any
indemnifying party similarly notified, to assume the defense thereof, with
19
counsel satisfactory to such indemnified party, and after notice from the
indemnifying party to such indemnified party of its election so to assume the
defense thereof the indemnifying party shall not be liable to such indemnified
party for any legal or other expenses, other than reasonable costs of
investigation subsequently incurred by such indemnified party in connection with
the defense thereof. The indemnified party shall have the right to employ its
own counsel in any such action, but the fees and expenses of such counsel shall
be at the expense of such indemnified party unless:
(i) the employment of counsel by such indemnified party has been
authorized by the indemnifying parties;
(ii) the indemnified party shall have reasonably concluded that there
may be a conflict of interest between the indemnifying parties and the
indemnified party in the conduct of the defense of such action (in which case
the indemnifying parties shall not have the right to direct the defense of such
action on behalf of the indemnified party); or
(iii) the indemnifying parties shall not in fact have employed counsel
to assume the defense of such action, in each of which cases the fees and
expenses of counsel shall be at the expense of the indemnifying parties. An
indemnifying party shall not be liable for any settlement of any action or
claims effected without its written consent.
(d) If the indemnification provided for in this Section 9 is unavailable
to any indemnified party in respect to any losses, claims, damages, liabilities
or expenses referred to therein, then the indemnifying party, in lieu of
indemnifying such indemnified party, will contribute to the amount paid or
payable by such indemnified party, as a result of such losses, claims, damages,
liabilities or expenses (i) in such proportion as is appropriate to reflect the
relative benefits received by CepTor on the one hand, and the Placement Agent on
the other hand, from the Offering, or (ii) if the allocation provided by clause
(i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of CepTor on the one hand, and of the
Placement Agent on the other hand, in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities or
expenses as well as any other relevant equitable considerations. The relative
benefits received by CepTor on the one hand, and the Placement Agent on the
other hand, shall be deemed to be in the same proportion as the total proceeds
from the Offering (net of sales commissions, but before deducting expenses)
received by CepTor bear to the commissions received by the Placement Agent. The
relative fault of CepTor on the one hand, and the Placement Agent on the other
hand, will be determined with reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission to state a
material fact relates to information supplied by CepTor, and their relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The amount payable by a party as a result of the
losses, claims, damages, liabilities or expenses referred to above will be
deemed to include any legal or other fees or expenses reasonably incurred by
such party in connection with investigating or defending any action or claim.
(e) CepTor and the Placement Agent agree that it would not be just and
equitable if contribution pursuant to this Section 9 were determined by pro rata
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allocation or by any other method of allocation which does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 9, no person guilty of fraudulent
misrepresentation (within the meaning of Section 11 (f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(f) The rights to indemnification and contribution hereunder shall
terminate on the second year anniversary of the Closing Date.
Section 10. CONFIDENTIAL INFORMATION.
Placement Agent acknowledges and agrees that it will have access to, or
become acquainted with, Confidential Information of CepTor in the performance of
its duties and obligations hereunder. For purposes of this Agreement,
"Confidential Information" shall mean all confidential, proprietary, or trade
secret information, property, or material of CepTor and any derivatives,
portions, or copies thereof, including, without limitation, information
resulting from or in any way related to (i) the Offering; (ii) the business
practices, plans, intellectual property, proprietary information, formulae,
methods, practices, designs, know how, processes and procedures, software, test
results, financial information, sales, customers, employees, suppliers,
contracts, agreements or relationships of CepTor; and (iii) any other
information or material that CepTor designates as Confidential Information.
Placement Agent shall keep all Confidential Information in strict confidence and
shall not, at any time during or for five (5) years after the expiration or
earlier termination of this Agreement, without CepTor's prior written consent,
disclose, publish, disseminate or otherwise make available, directly or
indirectly, any item of Confidential Information to anyone. Placement Agent
shall use the Confidential Information only in connection with the performance
of the Offering and for no other purpose. Notwithstanding the obligations set
forth above, Placement Agent may disclose Confidential Information to any of its
employees, consultants or subcontractors who need to receive the Confidential
Information in connection with the Offering, provided that Placement Agent shall
ensure that, prior to disclosing the Confidential Information, each
subcontractor, consultant or employee to whom the Confidential Information is to
be disclosed is made aware of the obligations contained in this Agreement and
agrees to undertake, in a manner legally enforceable by CepTor, to adhere to
such terms of this Agreement as if it were a party to it. Placement Agent
recognizes that its threatened breach or breach of this Section 10 will cause
irreparable harm to CepTor that is inadequately compensable in damages and that,
in addition to other remedies that may be available at law or equity, CepTor is
entitled to injunctive relief for such a threatened or actual breach of this
Section 10. Notwithstanding the above, Placement Agent shall not have any
obligations of confidentiality with respect to any portion of Confidential
Information which (i) was previously known to the Placement Agent prior to
receipt from the disclosing party, (ii) is now public knowledge, or becomes
public knowledge in the future, other than through acts or omissions of the
Placement Agent in violation of this Section 10, or (iii) is lawfully obtained
by the Placement Agent from sources independent of the disclosing party who have
a lawful right to disclose such Confidential Information. The Placement Agent
may disclose Confidential Information to the extent such disclosure is
reasonably necessary in complying with applicable governmental laws, rules or
regulations or court orders.
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Section 11. TERMINATION
(a) The Offering will terminate on or before November 30, 2004, unless
extended by CepTor and the Placement Agent, in their sole discretion, by mutual
agreement for up to 180 days, without notice to prospective subscribers (any
such date upon which the Offering terminates or any date referred to herein as
the "Termination Date").
(b) Either Party may terminate this Agreement in the event of a material
breach hereof by the other party.
(c) Upon termination of this Agreement, all subscription documents and
payments for the Units to be sold in the Offering not previously delivered to
the purchasers thereof shall be returned to respective subscribers without
interest thereon or deduction therefrom and neither party to this Agreement
shall have any continuing obligation to the other; PROVIDED, HOWEVER, that the
Placement Agent will continue to be subject to the confidentiality provisions of
Section 10 above.
Section 12. MISCELLANEOUS.
(a) No change, amendment or supplement to, or waiver of, this Agreement
or any term, provision or condition contained herein, shall be valid or of any
effect unless in writing and signed by the party against whom such is asserted.
(b) This Agreement shall be governed by and construed in accordance with
the laws of the State of Florida.
(c) This Agreement constitutes the entire understanding between the
parties with respect to the transactions contemplated hereby, and all prior or
contemporaneous oral agreements, understandings, discussions, representations
and statements are superseded by this Agreement. The waiver of any particular
condition precedent, provision or remedy provided by this Agreement shall not
constitute the waiver of any other.
(d) This Agreement may be executed in any number of counterparts, each of
which shall be taken as one and the same instrument, to the same effect as if
all the parties hereto had signed the same signature page. Any signature page of
this Agreement may be detached from any counterpart of this Agreement identical
in form hereto but having attached it to one or more additional signature pages.
(e) The provisions of this Agreement shall be binding upon and accrue to
the benefit of the parties hereto and their respective heirs, legal
representatives, permitted successors and permitted assigns.
(f) If any provision of this Agreement for any reason shall be held to be
illegal, invalid or unenforceable, such illegality shall not affect any other
provision of this Agreement and this Agreement shall be amended so as to enforce
the illegal, invalid or unenforceable provision to the maximum extent permitted
by applicable law, and the parties shall cooperate in good faith to further
modify this Agreement so as to preserve to the maximum extent possible the
intended benefits to be received by the parties.
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(g) All representations, warranties and agreements of the parties hereto
contained herein will survive the delivery and execution hereof and the Closing
for a period of three (3) years from the date hereof, and shall remain operative
and in full force and effect regardless of any investigation made by or on
behalf of any party hereto or any person who controls any such party within the
meaning of the Securities Act, and will survive delivery of the securities
constituting the Units hereunder and the delivery of the Placement Agent
Warrants and any termination of this Agreement.
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If the foregoing conforms with your understanding of the arrangements
between us, please sign the copy of this letter provided in the space indicated,
whereupon this letter shall constitute a binding and legal agreement between the
CepTor and the Placement Agent, and upon obtaining the signature of Pubco below,
Pubco shall become a party to this Agreement as if Pubco had executed this
agreement as of the date first written above.
Very truly yours,
CEPTOR CORPORATION
By: /s/ Xxxxxxx Xxxxxxx
---------------------------------
Xxxxxxx Xxxxxxx
Chief Executive Officer
Accepted as of the date first above written:
XXXXXXXXXX SECURITIES CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxxx
---------------------------------
Xxxxxxx X. Xxxxxxxx
President
By executing this letter in the space provided below, Pubco hereby
acknowledges, agrees and confirms that it will be deemed to be a party to this
Agreement and shall be subject to all of the obligations applicable to Pubco as
if Pubco had executed this Agreement as of the date of this Agreement first
written above. Pubco hereby ratifies and agrees to be bound by all of the terms,
provisions and conditions contained in this Agreement.
PUBCO
----------------------------------------
Company Name
By:_______________________________________
Name:
Title:
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